May 13, 2014

'Judith and Her Maidservant with the Head of Holofernes' by Artemisia Gentileschi is in the Detroit Institute of Arts. Fund-raising experts and DIA leaders told the Free Press previously that fulfilling its part of the grand bargain will not be easy. / Kimberly P. Mitchell/Detroit Free Press

Written by

Nathan Bomey, Alisa Priddle, Brent Snavely and Tom Walsh

Detroit Free Press Business Writers

Detroit Three cultural philanthropy

GM, Ford and Chrysler have given millions to the Detroit Institute of Arts and other Detroit cultural groups, including six-figure gifts for annual operations and other projects and seven-figure gifts for major capital campaigns. For example, the GM Foundation gave $5 million to the DIA in 2000 for an African-American Art center. GM, Ford and Chrysler each gave at least $5 million to the Detroit Symphony Orchestra more than a decade ago to help build the Max M. Fisher Music Center.

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The Detroit Three automakers are considering giving tens of millions of dollars to the Detroit Institute of Arts toward its $100-million obligation to help reduce pension cuts and protect art from being sold in the city’s bankruptcy, the Free Press has learned.

The DIA approached the auto companies about six weeks ago to ask them to contribute more than $50 million as a group, one person familiar with the talks said. The total donation for the three may end up closer to half that amount, said the source. But once the automakers are on board, the museum might make similar requests to automotive suppliers. The DIA also asked for help from several non-auto foundations, including the Los Angeles-based Getty Foundation. Today it said it is mulling the request.

Two people familiar with the discussions said that if a deal gets done, the automakers would coordinate a joint announcement through the DIA. A deal may be as close as a week away.

As part of what is being called the Grand Bargain, a group of local and national foundations already pledged $366 million over 20 years to a fund to help pensioners and protect art, but only if there is a sweeping bankruptcy settlement among all the parties. Michigan lawmakers are considering contributing $195 million up front to the fund — the equivalent of about $350 million over 20 years when interest is figured in. And the DIA agreed to raise $100 million for its part, so the art would be protected from the auction block and the museum spun off as an independent nonprofit shielded from the city’s finances.

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The automakers met with DIA director Graham Beal and chairman Gene Gargaro and others. It requested as much as $25 million from at least one of the larger automakers, said several of the sources for this report, who all requested anonymity because they weren’t authorized to speak publicly about the donations. Representatives for all three automakers told the Free Press they’re seriously considering contributions but would not specify the amounts. The DIA would not comment.

Before committing, the automakers want a clearer picture of how the money would be used and governance issues.

Several major creditors — namely, bond insurers Syncora and Financial Guaranty Insurance Co. — are expected to argue that the DIA cannot plausibly raise $100 million over 20 years. Syncora, FGIC and some other major creditors want Detroit to consider selling DIA property to help pay off the city’s $18 billion in debt and liabilities.

But major contributions from the Detroit Three would support the city’s case that the Grand Bargain is a feasible resolution to the largest municipal bankruptcy in U.S. history without resorting to liquidating city-owned assets. The auto companies would be looking at spreading their commitment out over many years.

“We are having confidential discussions with the DIA and are considering the matter very carefully,” Ford Fund spokesman Todd Nissen said in a statement. “Ford has been a long-time supporter of the DIA and its contributions to southeast Michigan.”

GM and the GM Foundation said in a statement: “The DIA must be central to any plans for a revitalized Detroit. Both GM and the GM Foundation are giving very careful consideration to how we can help preserve this treasure at such a critical time.”

“Chrysler Group is committed to playing a positive role in Detroit’s revitalization,” the automaker said in a statement. “Accordingly, we are reviewing the DIA’s request.”

Fund-raising experts and DIA leaders told the Free Press previously that fulfilling its part of the Grand Bargain will not be easy, but unique circumstances will help the museum make a strong pitch to corporate and individual donors. Particularly enticing for some potential donors is the once-in-a-century opportunity to establish a DIA independent of city ownership and at the same time help the city emerge from bankruptcy in a healthier state.

The DIA’s fund-raising challenges are complex. In addition to its $100-million commitment to the Grand Bargain, the museum is simultaneously launching a $200-million capital campaign to secure critical endowment dollars over the next decades. At the same time, it still has to raise around $10 million a year in operating funds.

The long-term capital campaign is critical because the millage that provides roughly 70% of its annual $32-million budget will end in 2022. Interest from the endowment will be expected to fill the $20-million operating gap left when the millage expires.

Historically, GM, Ford and Chrysler have given millions to the DIA and other Detroit cultural groups, including six-figure gifts for annual operations and other projects and seven-figure gifts for major capital campaigns.